Today is shaping up negative for Chongqing Water Group Co.,Ltd. (SHSE:601158) shareholders, with the covering analyst delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Chongqing Water GroupLtd from its sole analyst is for revenues of CN¥7.9b in 2024 which, if met, would be a decent 8.6% increase on its sales over the past 12 months. Statutory earnings per share are presumed to climb 10% to CN¥0.25. Previously, the analyst had been modelling revenues of CN¥9.0b and earnings per share (EPS) of CN¥0.38 in 2024. Indeed, we can see that the analyst is a lot more bearish about Chongqing Water GroupLtd's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Despite the cuts to forecast earnings, there was no real change to the CN¥7.33 price target, showing that the analyst don't think the changes have a meaningful impact on its intrinsic value.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Chongqing Water GroupLtd'shistorical trends, as the 8.6% annualised revenue growth to the end of 2024 is roughly in line with the 9.2% annual revenue growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.3% annually. It's clear that while Chongqing Water GroupLtd's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Chongqing Water GroupLtd. There was also a drop in their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Chongqing Water GroupLtd.

Worse, Chongqing Water GroupLtd is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. You can learn more about our debt analysis for free on our platform here.

We also provide an overview of the Chongqing Water GroupLtd Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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